Use of AI in public procurement

United Kingdom

There has been a huge surge in interest in Artificial Intelligence (“AI”) technology in recent months as consumer generative AI tools are starting to become integrated into day-to-day life.

As the technology rapidly advances, the private and public sectors are considering how they can incorporate AI technology into their organisations to create transformational change, to streamline processes and to increase productivity. When it comes to public procurement, bidders and authorities are thinking about how they could incorporate AI into a procurement process.  

This article considers some potential opportunities and risks in relation using AI in a process. 

How could AI potentially be used in a procurement?

Participating in or running a public procurement is generally time-consuming and labour intensive, with (at the very least) a number of forms to be completed by bidders and then evaluated by the authority. It is often much more complex than that, requiring significant human resource and input from all participants over a period of time.  Using AI tools in public procurement could, in theory, automate some of the labour-intensive processes, which could in turn optimise resources and lead to more efficient processes. 

AI technology does not (yet) refer to a robot capable of independently preparing a response for a bidder, or running the entire end-to-end process for an authority. AI technology is not yet sophisticated enough to replace the human procurement and subject matter experts. The technology does already have the potential to supplement and support the work of the user in certain areas. Some areas of the procurement process where AI could potentially be used include: 

  1. Preparing bids: it may already be possible for a bidder to use AI technology to help compile its response, e.g. to generate its response to a specific “exam” question using generative AI.     
  2. Responding to CQs: advanced chatbots could be used by an authority to respond to bidder queries throughout the procurement process. This could save time and resource for the authority and speed up response times to the bidder.

The big question is whether AI could have a role in evaluation. Could the evaluation of responses against the published criteria ever be fully automated, without any human involvement? As AI technology continues to advance, it is anticipated that AI will be able to support more of the procurement process.

Risks

Contracting authorities and utilities are required to run their procurements in compliance with the relevant procurement rules. Those rules require, amongst other things, that authorities treat economic operators equally and without discrimination and that they act in a transparent and proportionate manner.

Before implementing an AI tool in the procurement process, authorities should very carefully consider how they would be able to demonstrate compliance with their obligations and whether by introducing an AI tool into the process there could be a risk of non-compliance with their obligations.

Bidders should be alive to potential risks of using generative AI technology to prepare their responses. At the core of AI technology lies the coding used to develop it, and AI tools are only as sophisticated and comprehensive as the rules built into them. AI tools can have weaknesses in identifying and processing information and may be prone to biases. There have already been well publicised instances of consumer generative AI citing fictitious information, which is a potential risk of a bidder relying on information produced by AI.

Bidders should also carefully consider the authority’s rules for the procurement they are participating in to check whether they would be complying with those rules by using AI in their response. Authorities may start to include specific terms and conditions in their procurement documents covering a bidder’s use of AI.  

The future of AI in public procurement

In terms of the future of AI in public procurement in the UK, the reforms about to be introduced in the form of the Procurement Bill currently before Parliament do not make any reference to the use of AI technology, but it will result in a single digital platform in a move towards digitisation.

When contracting authorities are exploring the idea of using AI in their procurement processes, in addition to compliance with the applicable procurement rules, there are many other considerations they will need to take into account, including, but not limited to, the general public law principles that require them to act fairly and rationally when making decisions. Authorities may need to consider judicial review risk.

Separately, the UK Government has recently closed its consultation on its proposed approach to AI regulation in the UK. This is another area that authorities and bidders will need to keep a close eye on.